Retinal vascular dysfunction and degeneration are the early characteristics of diabetic retinopathy (DR). Compelling evidence suggests that the chronic diabetic milieu damages retinal endothelial cells and pericytes, resulting in loss of retinl capillaries. At the late stages, extensive capillary dropout leads to severe reduction in blood supply and defects in oxygen delivery to the neural retina. This, in turn, stimulates retinal expression and production of pro-angiogenic factors, which promote vascular leakage and new vessel growth leading to retinal edema and proliferative retinopathy. Clearly, retinal endothelial injury, if irreversibly leading to consequent capillary loss, is a central event in the development and progression of DR. However, to date, there is no effective therapy available to prevent diabetes-induced retinal vascular damage. The goal of our project is to address this critical gap by identifying and harnessing endogenous protective factors to enhance retinal cell survival and improve vascular function in diabetes mellitus. Our published and preliminary studies have revealed one such protective factor, namely X-box binding protein 1 (XBP1). XBP1 is a transcription factor in the core signaling pathways of the unfolded protein response (UPR) and is broadly implicated in ER biogenesis, protein folding, immune response, and lipid metabolism. Our data confirmed a fundamental role of the XBP1- mediated UPR in maintaining endothelial cell homeostasis against inflammation. In addition, we found that XBP1-null retinal cells are sensitive to oxidative damage and apoptosis. Strikingly, our new results suggest a novel function of XBP1 in regulation of mitochondrial remodeling and activity. Thus, we hypothesize that XBP1 is a central regulator of cell adaptation to diabetic stressors through coordinating ER and mitochondrial homeostasis. We propose 3 Specific Aims to test this hypothesis, focusing on XBP1's role in mitochondrial regulation in retinal endothelial cells. In Aim 1, we will examine if XBP1 is involved in mitochondrial remodeling and whether enhancing XBP1 expression can reverse diabetes-induced deficits in mitochondrial biogenesis. In Aim 2, we then will delineate if XBP1 regulates mitochondrial energy production through modulation of ER- mitochondrial contact and calcium trafficking. Finally, in Aim 3, we will establish whether XBP1 is essential for mitochondrial ROS detoxification, thereby reducing oxidative damage and apoptosis. This application is conceptually and technically innovative in that it will elucidate a novel function o XBP1, a traditional UPR protein induced by ER stress, in regulation of mitochondrial activities, and using novel RNA-seq and proteomic approaches to identify new XBP1-specific target genes and proteins that are critically involved in these processes. This project also has high translational potential by identifying novel therapeutic targets to enhance retinal cell adaptation to diabetic stresses and prevent/reverse retinal damage in diabetes.